It hasn’t even been four years since Amazon bought Twitch.tv, the live-streaming platform that has become the primary destination for broadcasting the playing of video games. Since then, the service has grown to 15 million daily users, with the average person watching 106 minutes per day. In hindsight, it’s no wonder that Amazon was willing to pay $1 billion to snap up Twitch — but for a long time, it was an open question whether anyone would buy it at all.

Twitch began life as Justin.tv, a web-based live broadcasting platform. As venture capitalist Mike Maples Jr. of Floodgate Capital tells us on this week’s episode of Converge, it wasn’t always clear that Twitch would thrive. In fact, it was more or less stagnant before the company pivoted into games. “They were Justin.TV for five years before Justin.TV Games took off, and we realized that was the company,” Maples said. (In a nice Silicon Valley twist, Twitch has lately been embracing all sorts of non-gaming video, effectively pivoting back to Justin.tv’s original vision.)

The only reason Twitch lived long enough to be sold to Amazon is that its creators were patient with it, Maples said — spending less money than they could, and continually experimenting to figure out which parts of their streaming service resonated the most broadly. “Where I give the Twitch founders a lot of credit is they survived five years to have that discovery,” Maples said. “And most startups would have spent too much money too soon, felt the pressure to grow super fast, and run out of money before the discovery ever happened.”

Twitch is an unusually successful company. But social apps often succeed by accident, Maples says — and as one of Twitter’s first investors, he would know. “To me, these exponential outcomes happen when you have great founders with very specific and deep domain knowledge of some major new shift that’s even bigger than the company,” Maples said. “Twitter happened because everybody was getting connected, everything was getting mobile, and the web was kinda going through this new phase of not just being a place to go visit pages, but becoming a platform to connect people. And they just were right place, right time, right product.”

Maples lays out his investing strategy on this episode of Converge, an interview game show where tech’s biggest personalities tell us about their wildest dreams. It’s a show that’s easy to win, but not impossible to lose — because, in the final round, I finally get a chance to play and score a few points of my own.

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00:00:01Hello and welcome to converge now available on google podcast My name is casey newton I'm silicon valley editor of the verge and today on converge i'm going toe to toe with mike maples junior you know we've had ceos and product wizards step into the converge chair before and
00:00:18maybe you've asked yourself where these people getting all of their money because it sure seems like they've got a lot of money don't they Well listen mike is the answer to that question or at least one of the answers He's the co founder of floodgate capital and he
00:00:29routinely appears on forbes is might this list which is a list of people who turn things to gold by touching them No big deal mike invested in companies including twitch the live streaming site that sold amazon for a billion dollars we believe a web design company that just
00:00:43sold a square for a bunch of money an octa an enterprise company and if i told you what they did it is so boring you would fall into a deep slumber and never awakened But one of mike's earliest successful investments was twitter a company i'm personally obsessed with
00:00:57and mike and i talk a lot about twitter on this episode secure a twitter head Keep listening You know i wanted to have a venture capitalist on this show because i find what they do to be oddly mysterious right They meet with companies that have barely been able
00:01:11to rent a garage they take a look at a handful of presentation slides and then they spent a lot of someone else's money in the hopes that it will turn into the most money that anyone has ever seen and a handful of them have actually been able to
00:01:23do this successfully And mike maples if you ask other veces they will tell you that he is more successful than most I like talking to mike because it let me do something i've always wanted to do which was pitch a venture capitalist something in the wild card round
00:01:35of this episode like asked me to pitch him twitter using only the information that was available when he invested back around two thousand five This turns out to be an insanely difficult thing to do Maybe you would have done a better job and you can tell me about
00:01:48that if you would But you know what It's also a very good time And so i'm excited to introduce you to mike maples junior because it is time to play convert hello and welcome to another episode of converge game show that is easy to win but not impossible
00:02:10to lose each week of course we bring on some of silicon valley's most fascinating personalities and they compete to see how high they could go on the all time converge Leaderboard like guest today is mike maples junior partner and co founder founder really a floodgate capital an early
00:02:25investor and companies including twitter twitch octa cruise and weebly We just got back for three hundred sixty five million dollars by square Mike is also a high ranking member of the forbes minus list which is a list of people who can turn things to gold simply by touching
00:02:39them Mike thank you for joining teo Please don't touch me I have a lot going on later tonight Mike is this your first time on a game show revue eyes I i confessed to my first game show ever You know what i think it's going to be a
00:02:52lot of fun And if it's not just raise your head will stop Actually that's not an option All right so coarse converge consists of three rounds The big idea that interview round and the wild card round And now it's time to get started Thie first game we play
00:03:08on every episode of convert is the big idea Mike i asked you ahead of time to bring me your biggest and best idea of a non self promotional nature and we'll pick it apart and see what's inside points are awarded on the basis of originality presentation profit potential
00:03:24and whether i personally agree with it So mike what is your big idea My big idea right now is the problem of fake growth in silicon valley Fake growth Yes so we talk about fake news and politics but i think that fake growth has become as toxic and
00:03:42endemic to our ecosystem is fake news has in the media business and i think that fake growth hurts founders more than anybody because it causes them to labour on a company that often ends up being not worth a lot after many many years of effort So i've started
00:04:02a company and i'm i've let's say i've i've made a nap and i've instrumented it with all sorts of metrics on him getting the data back What what tells me that my company's really growing and what are some of these signs of fake growth that you are you're
00:04:16seeing and the entrepreneurs were talking with yeah s o to me Real growth to find is growth that adds true value to the business in the customer and so if you step back and say why should a startup ever lose money The reason is that they're taking that
00:04:33money and the belief is that more value can be created that a category khun b one by spending money investing money now to win that category the future but when we lose money we need to be creating commensurate value or else the money lost isn't justified Well the
00:04:52problem with fake growth is a mindset of money is easy to get so if i can raise it i might as well go fast and spend it and you know if food was free that doesn't mean i should eat more food That doesn't mean i'd be better off
00:05:06I'd be in worse shape and many of these companies suffer from the same kind of predicament So the idea here is cos go out and maybe try to be by customers using all of the millions of dollars you've given them and they think if i could just buy
00:05:20enough customers i'm going to find a business in here somewhere but they don't actually find the business yeah or they engage in what i sometimes call vanity based revenue chasing so rather i like to think of real growth is accumulating attractive customers or users and part of fake
00:05:36growth is oh i need to impress my vc in the next board meeting and so i need to show that i made the numbers any way i can And so what ends up happening is if you chase unattractive customers to get the revenue the short term they're more
00:05:50likely to go away in the long term They're more likely to ask for features in the product that don't really add to your strategy your business And so in the end i think that having discipline and integrity about who your customers are and how you're going to grow
00:06:04and yes it's ok lose money But we're losing money because we're being sort of long term greedy in the value that we create That's what we really look for but what's happening today too often is people are assuming money is free and as long as the numbers look
00:06:19up into the right it's all good right That just didn't true Now you know some people say i'm the most attractive customer they've ever had but it's not just personal with me You know what That what you have me thinking about right now is one of my favorite
00:06:31businesses that i assume will be dead within twelve months which is movie pass Okay i don't know if movie passes on your mind if you're not familiar with movie past the ideas you pay an absurdly low amount of money and they change it all the time But you
00:06:42know recently it's been a slow as i think eight dollars a month and the ideas you can see a movie a day anywhere around you at a movie theater and again you paid eight dollars a month for this privilege and this is a publicly traded company so this
00:06:55is sort of outside the realm of venture capital but i think a lot of people would accuse them of having fake growth that essentially they're buying customers in an unsustainable way and eventually they're going to burn through that cash pile and they're dead So we like is that
00:07:08the kind of company that you're talking about Well i don't know enough about their business to say in their defence based on what you just told me when i think about movie theaters it's a high fixed costs low variable costs business right So once the movie starts you
00:07:24could never fill that seat again that you didn't fill and so when you have a business like that the airline businesses like this to the cost of filling that seat is almost zero variable costs and so if you have a business that fills the seats in the theater
00:07:38fills the seats in the plains sometimes you can charge what seems to be really low prices but because the marginal cost of them serving that customers low it could work the problem i think business is like that as you train your customers to always look for discounts right
00:07:54And so that would be what i'd i'd worry less about them and more worried about just the theater business in general well this is what the movie theaters air terrified about that they're going to sort of trained a generation of movie goers that you know that you're never
00:08:06paying effectively more than sixty cents to see a movie and that if and when movie pass goes belly up people are going to want to go back to those theaters yeah or it reminds me a little bit of the group on on groupon did okay but part of
00:08:19the problem that groupon had was that they would they'd bring a bunch of customers of business but they weren't sustainable track of customers right And they you know they trained customers toe act not so well towards the businesses right now i've read enough medium block post by venture
00:08:33capitalists to know that when you talk about attractive customers you're talking about metrics like the cost of acquiring the customer and the total lifetime the value of a customer and sort of trying to make those numbers square and then creating intricate formulas and sort of charts and graphs
00:08:51Is that how you go about figuring out what's what's really growing well to me that's what happens after you did it right right So to me metrics like that are lagging indicators of success but what i what i really like or startups that say here are the places
00:09:07that were ten times better and here the people out there who if they knew what my advantage were they'd be irrational not to buy and so sell what we have where we have ten x advantages Two people who feel like it's a must have feature cell just that
00:09:23toe on ly them over and over again and companies that do that generally the metrics take care of themselves because if you have something that only you can deliver the delights people that they value then you could make a really good business out of it But what happens
00:09:38too often is the founders of the company or the investors want toe just get revenue anyway they can and and then And then they show up at board meetings later is distant critics and say hey you're metrics don't look good and it's like well no kidding you're metrics
00:09:52don't look good We've got a bunch of customers all over the place that don't make sense right Eso let's name names like who had a fake a growth business so i can name a few that flamed out just in twenty seventeen alone let's here so it's brig The
00:10:07hype evaluation was one hundred sixty nine million in april of twenty fifteen They went out of business in twenty seventeen after having burned through fifty nine million dollars That's a lot of money and if you weren't familiar with sprague i'm not sure how widely they distributed But it
00:10:21was an app that you could use to order food right to your doorstep was awesome Meal delivery app and the quality of the food varied The price was like probably the fourteen fifteen dollars range for for a lunch or dinner And i have to say for a lot
00:10:34of silicon valley journalists we relied heavily on that was like hey you know thanks sandhill road for that mill it was it was a nice subsidy but i think it's an interesting case to pick apart because as a customer i'm thinking i gave you fifteen dollars for a
00:10:48salad like it feels like the economics of that could work So like what What was the fake part of that Do you think Well i think that a lot of these companies were they run into problems and by the way sprig is a you know lux blew through
00:11:01seventy five million dollars like a company that would park a car for your car ferrari right And so in march of twenty sixteen they raise money at one sixty million dollar evaluation and then a year later they're out of business blowing through seven yik yak blew through seventy
00:11:16five million after juice arrow blew through one hundred twenty one million everyone's favorite silicon valley they were worth almost five hundred million dollars in march of twenty sixteen You know beefy blew through hundred fifty million after being worth five hundred sixty four million was like a used car
00:11:34market yes two thousand fifteen you know quick see blew through one thirty five million and was worth six hundred million in march of twenty fifteen and i couldn't even tell you what they did do you know what they did I can't remember i didn't do anything was it
00:11:47just a website that well they consume capital but they may be just a landing page that people gave money too but so here s so here is where i think companies run into problems i think that companies go through life cycle of value creation and growth so when
00:12:03a company starts out it has to go from zero to one before goes from one toe ex write and write and so like in zero one you've got an uncertain product an uncertain customer and you have to find something that's awesome that they've never seen before that they
00:12:19fall in love with okay can i pause you there because i've heard this term before go from zero to one and i know what zero is but i'm not sure what one so what counts is one one is customers start to say to you where have you been
00:12:31all my life startup not only do i want what you're selling me but i've got ten ideas that i've been waiting for someone to show up until about i'm trying to get people to say that about this podcast Yeah well sounds like you're on a pretty good start
00:12:46We're doing the best i can screw that up for today but but but so to me zero one is about getting to product market fit and what So when you're in zero one mode you have to endure the scar tissue and the muscle memory to know what creates
00:13:04the truth of your value because if if your product is truly valuable than scaling the business becomes about telling the truth to more people rather than throwing money at the problem of persuading people buy your stuff And so what a lot of companies tried to use that go
00:13:20try to go straight to the endgame of growing super fast and they don't even know what's valued by the customer yet they don't know how to reach the customer They don't know why they would really buy this and so they they throw money at that hoping teo overcome
00:13:35that issue But the other thing that we found is that going from zero to one convey a hugely variable amount of time so twitch a company i was involved with it took them almost five years before theyre justin dot tv for five years Before justine tv games took
00:13:51off and we realized that that was the company lift started out a zim ride and so you can't rush zero one what what you need to do is be hawkish on burn but patient for time but then once once you have product market fit then paradoxically you want
00:14:09ten x your business in a very predictable now a time because now you've kind of found the winning recipe and you want you want to satisfy the market completely and so the other place where we've seen fake growth happen is company goes from zero to one everybody's like
00:14:23you guys are awesome here's some more money right And then they go right off the rails because they do their second product too soon they go after their second market too soon they're not really sure why their first product was a hit and so now all of a
00:14:38sudden we're doing ten things not well and spending a lot of money doing it and so ironically one tow x zero one is earth one two exes like mars and you've got to be like mark watney and science it like crazy right and it's like you're tryingto you're
00:14:55trying to understand the levers and knobs and dials they're going to let you get you copy the thing that works over and over again superfast so for the people who listen to this this or boil it town is there as they're looking at whatever spreadsheets they're working on
00:15:08whatever the people who are listening to this are trying to grow right now what is your message Them t make sure that it's not actually fake what they're looking at Yeah i'd say that growth is a real growth is a combination of ambition and acceptance and if you're
00:15:22going to say i'm in one too ex growth mode you have to be ten xing your company to justify the capital that you're burning If you're not able to do that that's okay but then you probably should be trying profitable growth or something other than you know value
00:15:39creation that isn't happening And so where The biggest unfortunate value creation strategy for too many companies is what i call the denial strategy the company's burning capital but not growing fast enough relative to the capital they're consuming And when that happens eventually the company isn't worth the money
00:15:58it raised right And then the then the founders air just depended on the generosity of vcs in terms of how much they're going to give him when the acquisition happy and veces aren't always so generous what i'm hearing you say is don't buy customers until they're profitable or
00:16:12like don't buy a lot of them until they're profitable like an individual basis or don't i like to say hack value before you have growth and its whenever i see a company and and we're not making the numbers in somebody says we need a growth hacker I'm like
00:16:25no we need a value proposition and there's there's no point in adding growth resource is to value proposition that hasn't been achieved so far like twits What was the value proposition that made it different from justin tv Well i think that just people really liked collaborating kind of
00:16:43in their game playing activities and it just it surprised maybe the twitch guys would would recount it differently but i don't think that it was a premeditated discovery right I think we just it's like wow this is taking off let's Understand why Maybe that's the company and you
00:17:00know sometimes that happens But where i give the twitch founders a lot of credit is they survived five years toe have that discovery and most most start ups would have spent too much money too soon I felt the pressure to grow super fast and run out of money
00:17:16before the discovery ever happened All right well that brings us to the end of the big idea around there's a lot In there to chew on i hope the people who listen to this go back home and look in the mirror and ask themselves whether they're a big
00:17:28phony today say no to fake row don't be fake people that's the big message today now mike it is time to score your idea Originality is where we start and i'm going to give you a solid seven points okay I would say i've heard elements of that before
00:17:44but never delivered quite in the same way presentation i also have to give you a seven i liked your use of colloquial terms along with vc terms you gave me a little bit out folks eat texan nous thatyou is bred in you profit potential here's where you're going
00:18:03come out gangbusters i'm giving you a ten because literally your entire idea was profit potential that's like where that was the whole idea that the objective yes oh you you you really you hack to the format so that so it's kind of like artistic impression i didn't do
00:18:18quite as well as on technical technical merit was very good and then finally do i agree with it here i'm going to give you an eight now i know what you're saying why not attend here's Why again it's because some of these fake businesses create real value in
00:18:30my life when sprague was around i could get a meal at a vc discount and that's good for me okay so you know i grew that mostly but not all the way that is an extremely solid score and now i'm in a total it up thirty two points
00:18:44in the first round a very good showing for mike maples and with that we're going to head into the interview round thie round mike where you attempted charm our listeners in a way that burnishes your personal brand and improves your deal flow S o mike you are a
00:19:00venture capitalist in you're the first vc to come on converse a thank you ah and i think many of our listeners they're going to know the basics of being a vc you take other people's money you turn into more money on i think some people from the outside
00:19:12think that you know is that really that hard on the other people they think well how do i know of some business that i've spent very little time What is actually going to make money So what i want to know is do you have a consistent approach when
00:19:25you're meeting with all these companies or is it does it just very from founder to founder founder Well i would say that i'm a very emotional investor and so i basically believe that great start ups or a rare event and kind of magical and that it's kind of
00:19:42point one percent outcome so about ten thousand companies get started here and ten of them create ninety five percent of the value of the industry it's crazy it's crazy i mean it's just almost hard even get your mind around it right And so i call those point one
00:19:57percent founders the prime movers and i believe it's my job teo help the prime movers to invest in them before the rest of the world believes it's before there's prague market fit before there's a parade to jump in front of and so i'm a little bit more of
00:20:13a co conspirator than an investor i'm not very much bile oh sell high i just think that these prime movers bring abundance to the world deserve and need special help early on because the rest of world is usually pretty skeptical you know lift encountered resistance legally even operate
00:20:32people said twitter stupid hundred forty characters or less and so i find that a lot of these really good ideas they're so powerful that they encounter a lot of resistance because they change people's point of view and so my job is to find those prime movers before the
00:20:47rest the world believes and if if i find him the numbers just can't take care of themselves or is there a difference between that and guessing and like if so like what is the difference yeah so i think that if you if you tried to index all ten
00:21:01thousand cos you'd lose money right So but throwing a dart at the wall doesn't usually work and so you could argue that we've just had a few good guesses along the way and you could probably argue that and when we've had enough hits that it would suggest that
00:21:17we've had some picking skill but you know who knows right maybe we'll never have another one but i do i do believe that startups are trying to change something in a very fundamental and exponential way and a lot of startups are good ideas but they're just not exponentially
00:21:35powerful enough to bring about the kind of change that you need to be one of those point one percent special companies so i'd like to use twitter is an example because i'm obsessed with twitter as our journalists are he and i read that you invested twenty five thousand
00:21:48dollars in twitter and that by two thousand six that investment was worth twenty six times what you paid more and probably mohr eventually or even more than now when you invested was it still o'dea was until the podcasting company well so i invested no d'oh and it didn't
00:22:03work out and at the very end evan williams said you know we've had some kind of discussions back forth with the investors i've just decide to give everybody their money back and so i said i you know i don't think you owe me anything venture capital has you
00:22:18know adventure is in there and so you know i just you win some you lose some say said well this is just kind of how we need to do it and i said well i'd really like to invest in whatever your next thing is i'm not sure i
00:22:30even care what it is and what value to that point just like i like that william's well you know i just thought it was very honorable the way he'd approached it and you know sometimes it's not the founder that failed it's just the business sided and work and
00:22:45is investor it's really important to separate that and so so f says well we're working on something and i don't really know what it's going to turn into but we're either call voicemail to point o r t w t t r and and i'm like well what is
00:23:00what does it do And he says well you say what you're doing wait do you didn't have a good guest from voicemail to point know what it did No nobody yeah and and so so you say what you're doing and it's like well then what happens Oh one
00:23:13hundred forty characters or less and i was like what does it do after that And he said that's it that's all it does and i was like well eyes their revenue model he said no what's the product what's the road map there is no road map and i
00:23:27was like well if you know why do you why even think there's a product much less a company And he says i have no idea but if but my my my view is that if if a million people did blog's when i did blogger maybe ten million people
00:23:44do micro boggs And if if that happened i think that the burden of proof would be on the people who are negative And so so i was like great well when you decide if you decide to do this thing let me know i'd like to invest and then
00:23:56it took off that it south by it blew up and it started become a thing And one day he calls me and says did you mean it when you said that you would like to invest Because if that's If so now is the time And so at the
00:24:10time it was a twenty million dollar valuation which seemed you know pretty high so i was like i'm not sure what i got myself into here but you know it ended up being worth more than twenty billion cars right And so it ended up working out great right
00:24:26And that is that a case we were like you felt like you had you sort of had like a worldview and instincts that that led you to make that particular investment or is that one where you sort of said that Like i don't know what's gonna happen here
00:24:37but like what the heck Well i like to make fun of venture capitalists who act as if they knew more than they did I think that actually i think part of if any success i've had that's due to what are thinking about it is that i don't get
00:24:53over preoccupied with what the business is right now because i pretty much know it's going to change and i like to make fun of people who are too confident in their knowledge about how things were going to happen or how things did happen right And so to me
00:25:07that these exponential outcomes happen when you have great founders with very specific and deep domain knowledge of some major new shift that's even bigger than the company and twitter happened because everybody was getting connected everything was getting mobile the web was kind of going through this new phase
00:25:26of not just being a place to go visit pages but becoming a platform to connect people and they just were right place right time right product yeah and then the other thing this is harder to describe it it's not gonna sound very vc like but some of these
00:25:39projects just have a magic to him and you just get a chill for what this could be that just twitter in the early days just felt like a a really powerful idea It was a simple but powerful but you know one time i heard quincy jones say you
00:25:55don't plan for thriller right Michael jackson there's almost there's almost an element of serendipity and just timing and just hitting the zeitgeist just right at the time and twitter had all that magic to it Twitter was twitter was one of those so so i don't know like a
00:26:12little bit more about how you are approaching your job day today I know some vcs who goto eight ten coffee meetings a day and say no to everyone but then they say let me know how i could be helpful like is that what you do Or is there
00:26:23another week way to be a vc that isn't just like constantly being pitched Well well i get pitched a lot of pride at least my share but i look always looked at it as people flow business and not a deal flow business so i always thought ok i'm
00:26:37goingto find areas that i'm interested in and at the time that i met have it was i was interested in what the time is called web to dato and was just like i'm just going to go meet the hundred smartest people in that area you know right now
00:26:49i'm doing some of that crypto and a few other areas but i've always had faith that if you just find the smartest people and spend time with them and try be helpful that the dots will sort of forward connecting the deal's reveal themselves but i've never i've never
00:27:03thought of it is like a funnel where you know some people say i'm going i'm going to look at one hundred pitches the next two weeks and i'm goingto pick one company I never looked at it that way I look at it like i'm doing a good job
00:27:16if i spend my day with awesome people every hour of the day And then hopefully one reveals itself and they'll let me be part of it right So you're talking to awesome crypto people i would love to know where you're at emotionally with crypto right now how onboard
00:27:31already you have you made a crypto investment yet we have yeah i'm i believe that probably will see corrections ahead and things like that but i don't also believe her because i'm not a believer in the next three to five years i believe it will happen and whether
00:27:47it takes five years or fifteen years it doesn't really matter to me i just want to find crash or no crash who's going to be the jeff bezos a crypto who's going to be the larry page who's going to be the the ebay of it and so you
00:28:01know i think that that there will be long term huge opportunities and i just think that the abundance that that tokens and some of these ideas could be bring to the world just extraordinary right But still probably a bad idea tio take out a mortgage to buy bitcoin
00:28:16well i mean i wouldn't necessarily advise it but hey everybody's free free country that's that's true god bless america our last venture capital question you know one thing i've been asking guests on the show is what will enable mohr women to start companies on the thing i hear
00:28:34most consistently is to put more women on the cap table which is to say have more women investors you have two partners who are women now out for two out of four including our co founder thie information ranks you fourteen out of seventy two on its diversity in
00:28:48deck so i would say relatively high up there how do you evaluate your progress in making silicon valley more diverse and welles do you think needs to be done yeah so so it's it's interesting when i started this i was getting pitched by a lot of founders and
00:29:02i was noticing that a lot of the founders that i talked to were not traditional vc backed founders a lot of women african americans folks of all colors and creeds and genders and i was like why is that And my my belief is that when you no longer
00:29:21have to raise five million dollars to start a company anybody can raise their hand and declare themselves an entrepreneur and it used to be you know you had to be validated by the people with five million dollar checks to write and because it was going to cost you
00:29:33that much to like build a server farm to how your business now people just goto a ws that's right and when it when it costs five million dollars to start company the capital markets have a lot more power in deciding who found her is and who won isn't
00:29:47and so i started to think about it i was like you know this isn't just about the fact that you're going to have lean startups and it's not just that five hundred thousands into five million but innovation itself is about to become democratized and what we need to
00:30:01do is is embrace that trying to play offense with respect to it and so that's why it was so important to start this with and and so i thought well if we were gender diverse today one we would operate as a gender diverse firm and not have to
00:30:16kind of retrofit it after the fact we don't talk about it that much publicly because we think that the best way toe make a statement is to just win and if if we win and if the other firms say you know how are we gonna compete with floodgate
00:30:31Because likely a bus give taskrabbit she's going to walk into that place and she's going to look at those partners and say these were my kind of peeps And if you believe that there's going to be more diane greens if you believe that there's going to be mohr
00:30:43heather bruner is like a w p engine on and if you believe that innovations will be democratized i'd like to play offense and and just win and then that's i think how you get more women in the business is to say i don't think we can win without
00:31:00operating that way and so so that's that's what we try really hard to do on dh so far i think it's it's really been helpful in terms of how we evaluate investments how we treat each other meetings how we just how we operate is affirm lots of nice
00:31:17hopeful note and the interview route on but if you heard that noise that means it's time for the lightning round ok oh boy in the lighting round your job is answer as many questions as you can in sixty seconds you are allowed to pass but should you do
00:31:32so you will forfeit the question i should say it's relatively rare to pass on any of these questions okay but let's put sixty seconds on the clock what is your favorite trait in an entrepreneur persistence and vision i only asked for one but i will accept that answer
00:31:46hit water or lacroix prefered flavor berry how many pitches do you get a week then i take meetings with or just come in did just come in about a hundred what's something that should definitely be on the block chain speed speed speed i'm going to see mimi methamphetamines
00:32:06do you care about virtual reality Yes is a iot overhype under height or appropriately hype it's appropriately hyped you invested in we billion check why didn't you convince them to change their names or something respectable because they worked eyes they're the last show you finished on netflix i
00:32:21can't think of one last good book he read oh gosh last good book you have five seconds left super forecasters if google duplex calls you do you think you should let it know that it's a body time expired that answer doesn't count all right ten questions means ten
00:32:37points so we'll put ten more points on the board actually a very good showing and the lightning round as well and now it's time for the wild card round theo wild card round we reach into the converted theron five thousand to play game generated by some of the
00:32:55world's most sophisticated algorithms earlier today we selected retro pitch and this will be the first time retro pitch has been played outside the verge cast where some of you may have heard me play that game with neela patel and paul miller as a tease to this very podcast
00:33:09now in retro pitch mike you will draw from a deck of cards to select an idea that is obvious on ly in hindsight your job will be to convince me a stupid and recalcitrant person to move forward with your idea i will evaluate your answers on originality presentation
00:33:26profit potential and whether i personally agree with them then the tables will turn and you will present me with an idea that is obvious and retro spect to pitch evaluating me under the same rubric do you have any questions Let's do this all right Very well i invite
00:33:42you to choose one of these cards amazon prime All right so now i want you to imagine we're in a world where amazon prime does not exist Maybe we're it's some sort of all purpose retailer and i would like you to convince me you know it's kinda aside
00:33:59some people who are threatened with stalkers or like people chasing them and stuff do not join witness protection programs because they would have to lose their amazon prime subscription that's amazing That is really sonic mark if it ran like the wind like zero one zero one hundred All
00:34:20right so this is it Yes In retrospect we can agree this was a good idea but let's pretend we live in a world where it didn't happen How would you convince me to build this thing People buy a lot of stuff i'm with you so far amazon sells
00:34:34people stuff amazon would like to sell people more stuff if we give people a reason to have loyalty points when they buy all their stuff from us they'll buy more stuff from us sort of like how if you goto like subway you can fill up one of those
00:34:48cards of stamps and at the end you get a free right sub but this would be like the subway card but for everything whoa that's a lot all right so how is this thing and what is this thing even what i what am i signing up for here
00:35:02maples yeah you're just it's easiest thing you ever did okay like you're already using amazon and now we signed you up for prime and as you buy more things you just get mohr you just get more stuff from amazon what are we going to give away This sounds
00:35:15very expensive What are we giving away to people No you probably books and you know the great thing is a lot of the things that you give away will be digital you get free downloads to maybe movies someday or music or wait hold on apples we're goingto have
00:35:30the bandwidth to be giving away movies and i totally i mean but think about how expensive it is to stream a movie over the twenty eight eight modems that most of our customers have right now Yeah but but the amount of money that will save in the mound
00:35:45money that will make by taking the cognitive load of decisions about where to buy stuff from customers will outweigh that so we want customers and to say i buy everything on amazon and have that be the default choice and if if they know that they get paid in
00:36:03these loyalty points we can call it prime For now if you guys have better namely name it some other than prime But i always thought it should be called amazon extreme Yeah you think Well just one thing a big x i mean if you put proved the project
00:36:17you know i guess we could have that discussion but i but i do think prime is good and you know we've tested on customers and they kind of like it interesting that's got legs Now i want to ask if you've described to me all of the features that
00:36:29you think should be available at amazon prime it launch because the what you say will factor into your score Well i think that what we have to do is figure out the ten x you know w t f thing that we would offer that would cause people and
00:36:46mass to sign up Exactly Do you have a thought on what that thing would be I don't all right So that's fair No that's a fair I respect that You gave me an honest answer that question Any last things you want to say to pitch me an amazon
00:37:00prime ah project that i'm probably going to reject because sounds very expensive yeah well you know amazon as a business has done a lot of things that seemed expensive at first but we're long term the right answer and i think this is you know on the path of
00:37:15the way they do their business and i think it's a strategic fit for how amazon works as a company and i just think that amazon has toe keep pushing ahead and keep it playing offense very good all right so now it is your turn to turn the tables
00:37:30on me and give me an idea and then i get to pitch the master and then you can tell me why i'm dumb so let's hear it maples twitter pitched we're okay this is a particularly good one because it really took me a long time to understand the
00:37:49value of twitter i created an account and before i start pitching i will say the moment i realized what i liked about twitter it was when i was at a concert and i could use a feature in the p i that would show me tweets around me and
00:38:00i could see what people who were saying at the very concert that i was at which which i thought was very cool all right so i made a pitcher twitter okay mike so you have a cool you know you have all these cool new mobile phones right You're
00:38:11over to shaker you start companies so you probably have ah motorola razor yeah something like that and you have a lot of friends love once around the world all day every day you're asking one question what are they doing right But if you were to send text messages
00:38:28or call them one that would eat up a lot of data and to your business and i'll really send text messages from my motorola razor right What terrible it's just keyboard it doesn't even have keys like just numbers you had to learn t nine that that language that
00:38:44is now dead Oh yeah never i don't know what so they so you don't want to do that but what if i could compose a text message and i could send it to a one phone number and then all of my friends could get that text message and
00:38:57then they would know that i was making a sandwich going to see a movie and then boom i've instantly connected with people people feel closer to me you know it's like it's like an away message from from a mme but evolves this like a is a business idea
00:39:16you have here this is definitely a business idea because house a house out of business eventually marketers they're going to pay me to tell you about what products i'm using to make my ham sandwiches if i'm going to see a movie hey maybe warner brothers wants to get
00:39:31in on that action and i say you know i'm going to see black panther and warner brothers is like what about wonder woman if they even own that i p which i just so who's on this twitter thing right now so right now we've got about fourteen people
00:39:46who live within a five block radius in san francisco and for all friends okay And we love to text each other all day and frankly i mean when you extrapolated out over five years texting features on phones are only gonna get betters so we could maybe bring in
00:40:05some new fonts you have to assume that emoji are going to improve over the years an emoji i'm sorry so like little little higher high rygel if ix that the japanese love never they're going to come to america and they're going to change the way that we tell
00:40:20each other i love and i'm gonna get that from a razor you're going to do that from your razor No and okay so so you're gonna you're fourteen people are going to be a big market for these ads that yep running yeah it's definitely an ad business or
00:40:36maybe eventually we do call it twitter prime where you could get free shipping on all your texts maybe do it carry your plan and like what what's the next product after this that's great okay here's what the next product is ephemeral text messages so i don't know if
00:40:55you've ever had like a text message that was on your phone the you wish would go away and you sort of forget to delete it What if i could sort of send you text throughout the day and you could view them for twenty four hours but then they
00:41:07would disappear at the end and it would sort of help you feel more comfortable sharing your really sounds like a different company me does yeah it sounds like a different company but i don't know i want there to be a connection in there somehow so in conclusion text
00:41:23messaging about my life updates with an eventual advertising business and i think texting is going to get better over time that's that is all i can see and in the meantime it cost money to send these texts costs us money it's going to yeah we're definitely gonna have
00:41:38to subsidise the text messages you know just till this thing gets off the ground just tell what we're able to get out of san francisco you know like san matteo santa fell you know some of the outlying region's once we're out of soma we're going to go crazy
00:41:51that's when this thing goes gang bust judge got you so that would be my idea okay twitter okay i think it could really change the way people talk okay yeah boom all right there it was that was very fun to dio because what i love about that game
00:42:08is it you it forces you to put yourself in the mind set of someone who can't see the future and she just realized how nothing that happened seemed remotely obvious at least not to me you know back then yeah one of the reasons twitter is like my favorite
00:42:21thing to write about and i spent so much time on it is that it is such an unlikely story right Yeah and it's it's one of those things too that i find this tricky is an investor it's hard to even remember how it really happened right like you
00:42:34don't even you tend to remember it is you were smarter than you really were to do the thing and you know there were probably times within the first eighteen months if you'd told me i could have even my money back i might have taken it and so it's
00:42:46just it's the part of what's so challenging about being a startup investor is even remembering what you knew and when a time because it's just life has a way of making you remember things differently right all right with that it is time to go with the scores Okay
00:43:07So let's dig right in originality Now this is something we're still sort of designing this game I don't know how i'm supposed to evaluate the originality of an idea that is not an original idea So i think i pretty much as give everyone a seven on this and
00:43:22then move on to the next one So i didn't think you had some original thinking it's kind like a mandatory bonus a little exactly exactly your options vested So you got a seventh originality presentation you know You know it's something i like about you mike and i should
00:43:36say it is my first chance getting to meet you You seem like a very unflappable person which is an investor I would appreciate it because i'm a sort of very excitable person who sort of always thinks that things are about to go very badly But you were able
00:43:49teo sort of allay my fears in a way that i respected so i'm going to give you an eight on that profit potential Now here's what I have to ding you some points because i got you i got you they didn't mention the one thing i was waiting
00:44:02for you to say which was free two day shipping no that's good that's so and that i would've you would've ding me for profits because you would have said that hey that costs more money that's very true but i think we can agree that over the long term
00:44:15it was the two day shipping that got us on a joint prime which wound up being the source of all the profits right make it right so i'm giving you a six on that i know that sounds harsh i know that sounds harsh but you know somebody's already
00:44:26here i get is a vc i get to say no to plans all day long so if you want to give me a six it's i think it's fair justice finally do i agree with the pitch of course i agree with you how could you not want amazon
00:44:39bribed to exist something else i've realized now is i need to completely i need to pick new scoring categories for this game but it was too easy to win but we're going to add up these points mike for the wild card around you earned fifteen twenty one thirty
00:44:53points amazing now is your chance teo judge me and you know be merciless i'm a grown up i can take it what would you give me for originality I think it was pretty original to be honest i would not have pitched twitter that way nor did i anticipate
00:45:09that you would well you're a smart man who has made a lot of money so i would hope you would not pitches i would give you a guess on eight on originality because it was unexpected i'll take it how about presentation How did i come across Um well
00:45:24you could move it maybe that's fine give it to me maybe five five okay and profit potential the boy not so good sorry three three that sounds that sounds fair and then finally do do you personally agree with it Isan interesting one for you right Actually is that
00:45:46like a company Yeah at the time everybody's saying why would you invest in such a stupid idea You know one hundred forty characters or less you talk about your going to the bathroom and stuff like that on this crazy thing so yeah i'm gonna give you ten yes
00:46:01all right i believe very good So now we move into the final scoring round mike i now have for us our final scores in this game of converge i earned twenty six points and you earned seventy two points which makes you the definitive winner of today's episode of
00:46:25converge congratulations How was this for you This this is awesome way better not deserved okay fantastic Well thank you for coming in I appreciate the perspective and i invite you to come back any time and participate in our tournament of champions which might be something we do if
00:46:43we make it like season three or something on with that mike maples thank you for making content with me All right thanks so much That's today's show my thanks to guess mike maples for both appearing on the show and for investing in twitter giving my industry a place
00:46:57to hang out during the day while our editors are ignoring us like you may have defeated me today but i studied your ways and if i ever start a company i will offer you insulting terms at a ridge ridiculous valuation thanks as always to might engineer jeremy thomas
00:47:10and my editor andrew marino If you like today's show it would mean a lot to me If you explain to your grandparent's what podcasts are that helps people find us how's the show going so far Don't hear from you or your investors email me casey at the merge
00:47:23dot com I'm at casey newton on twitter and you tweet about the show using the hashtag benghazi if you want even more of me in your life i read daily newsletter about social networks and democracy called the interface and you could find a link at my twitter bio
00:47:36and until next time the convergence from five thousand is closed came over no

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